ADOPTED BUDGET FY

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ADOPTED BUDGET

FY 2021-2022

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Government Finance Officers Association of the United States and Canada (GFOA) presented a Distinguished Budget Presentation Award to Alameda-Contra Costa Transit District, California, for its Annual Budget for the fiscal year beginning July 1, 2020. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as a financial plan, as an operations guide, and as a communications device.

This award is valid for a period of one year only. We believe our current budget continues to conform to program requirements, and we are submitting it to GFOA to determine its eligibility for another award.

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I am pleased to present the Alameda-Contra Costa Transit District (AC Transit) Fiscal Year 2021-22 Amended Adopted Budget. As the Bay Area gradually recovers from the economic downturn caused by COVID-19, restoring bus service to accommodate rider demand is our highest priority. This budget supports the need for increased service and maintaining financial and operational stability over the long-term.

The FY 2021-22 Amended Adopted Operating Budget is comprised of $499.0 million in revenues and expenses. The budget was developed on the basis of 1.9 million revenue service hours, 17.9 million revenue service miles, and 2,219 full- time employees.

The FY 2021-22 Capital Budget includes $76.4 million in spending and is composed of $69.2 million in grant funds and $7.2 million in District Capital funds. The Capital Budget includes 9 new and 37 continuing projects for a total of 46 projects.

Funding from the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act will allow the District to operate in FY 2021-22 at 85% of pre-pandemic service levels. Before the original Adopted Budget could be published,

$19.7 million in funds from the American Rescue Plan (ARP) Act were added at the September 8, 2021 board meeting to reach 90% service levels in FY 2022-23. Additional stimulus funding is necessary to be able to sustain and continue to restore service.

Recruiting, hiring, and training new bus operators is the greatest challenge for the District and other transit agencies in the region as we all try to restore service. On-the-job public health concerns pose another challenge, despite COVID-19 cases trending downward.

Despite the challenges, I am confident that the District can continue to meet the needs of our riders while maintaining operational and financial stability.

Sincerely,

Michael Hursh, General Manager

_______________________________________________________________________________________________

1600 Franklin Street - Oakland, CA 94612 - TEL (510) 891-4753 - FAX (510) 891-7157 - www.actransit.org

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ALAMEDA-CONTRA COSTA TRANSIT DISTRICT

RESOLUTION NO. 21-020

A RESOLUTION ADOPTING THE GENERAL FUND OPERATING AND CAPITAL BUDGETS FOR

FISCAL YEAR 2021-22

WHEREAS, the Board of Directors reviewed and established the Budget Calendar and

approved Budget Goals for the Development of the GeneraIFund Operating and CapitaIBudgets for FY 2021-22 during Budget meetings held during March 2021, Apri12021, and May 2021; and

WHEREAS, the GeneraIManager has developed the General Fund Operating and Capital Budgets for FY 2021-22 based on prevailing economic conditions; and

WHEREAS, the Board of Directors has received and reviewed the General Manager's

Proposed GeneraIFund Operating and CapitaIBudgets for FY 2021-22 during the Board meeting

held May 26, 2021.

NOW THEREFORE, the Board of Directors of the Alameda-Contra Costa Transit District does resolve as follows:

Section 1. Approves the Recommended General Fund Operating and Capital Budgets for FiscaIYear 2021-22 in the amount of$479.7 M illion with the expenses and transfers identified

below and incorporated by reference as Attachments 2 and 3 of the Staff Report 21-].40c:

a. Total Operating Revenues:

b. Total Operating Expenses:

c. Transfer to/(from) Unrestricted Net Assets:

479.7M 479.7M

O.OM

7.2M (7.2M) 76.4M e. District Funded Capital:

f. Transfer to/(from) General Fund g. TotalCapitalProgram Contribution

Section2. Approves a 3.0 percent increase to base salary for all unrepresented

employees, excluding Board Officers.

Section 3. Recognizes the 3.0 percent increase to base salary for ATU as of July 1,

2021 and a 3.0 percent increase to base salary for IBEW employee members as of January 1,

2022, as per their collective bargaining agreements.

Section 5. Directs the General Manager to return to the Board at a later date to

obtain approvalto implement any changes to district employees' wages and benefits not already

negotiated or approved.

Section 6. This resolution shall become effective immediately upon its passage by

four affirmative votes of the Board of Directors.

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PASSED AND ADOPTED this 9th day of June 2021

Elsa Ortiz, Presiden Attest

:, Di\tri

SeErbtary

1, Linda A. Nemeroff, District Secretary for the Alameda-Contra Costa Transit District, do hereby certify that the foregoing Resolution was passed and adopted at a regular meeting of the Board of Directors held on the 9th day of June, 2021, by the following rollcallvote:

DIRECTORS BECKLES, PEEPLES, WASH, WILLIAMS, SHAW, VICE PRESIDENT YOUNG,AND PRESIDENTORTIZ

AYES

NOES NONE

ABSENT:

ABSTAIN

NONE NONE

Approved as to Form and Content

ounsel

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RESOLUTION NO. 21-035

A RESOLUTION AMENDING THE GENERAL FUND OPERATING BUDGET FOR

FISCAL YEAR 2021-22

WHEREAS, the Board of Directors reviewed and established the Calendar, adoption of the

FY 2021-22 budget, and approved Budget Goals for the Development of the General Fund

Operating and CapitaIBudgets for FY 2021-22 during Budget meetings held during March 2021,

Apri[ 2021, and May 202].;.and

WHEREAS, the GeneraIManager has developed the GeneraIFund Operating and Capital Budgets for FY 2021-22 based on prevailing economic conditions; and

WHEREAS, the Board of Directors has received and reviewed the General Manager's

Proposed General Fund Operating and CapitaIBudgets for FY 2021-22 during the Board meeting held May 26, 2021; and

WHEREAS, the Board of Directors has received and adopted the General Manager's

Recommended General Fund Operating and Capital Budgets for FY 2021-22 during the Board meeting held June 9, 2021.

Section 1. Approves the Amended Recommended General Fund Operating Budget

for FiscaIYear 2021-22 in the amount of$499.0 Million with the expenses and transfers identified

below and incorporated by reference as Attachment 2 of the Staff Report 21-140d:

a

b.

c.

Total Operating Revenues

^499.0M

499.0M

O.OM

Total Operating Expenses

Transfer to/Ifrom) Unrestricted Net Assets:

Section 2. This resolution shall become effective immediately upon its passage by

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PASSED AND ADOPTED this 8th day of September 2021

Elsa Ortiz, President Attest

Ne?\\groff; District

1, Linda A. Nemeroff, District Secretary for the Alameda-Contra Costa Transit District, do

hereby certify that the foregoing Resolution was passed and adopted at a regular meeting of the

Board of Directors held on the 8th day of September 2021, by the following rollcallvote:

AYES DIRECTOR PEEPLES, PRESIDENT ORTIZ, DIRECTORS BECKLES, WALSH, WILLIAMS,

SHAW and VICE PRESIDENT YOUNG

NOES NONE

ABSENT:

ABSTAIN

NONE NONE

JilIA. Sprague,66neralCounsel

/

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RESOLUTION NO. 21-028

A RESOLUTION ESTABLISHING THE APPROPRIATIONS LIMIT FOR FISCAL YEAR 2021-22 AT

$584,043,403 PURSUANT TO ARTICLE Xlll B OF THE CONSTITUTION OF THE STATE OF CALIFORNIA

WHEREAS, Article XllIB to the Constitution of the State of California places appropriations limitations on the fiscal powers of the State and each local government; and

WHEREAS, Government Code Section 79].0 provides that each year the governing body

of each jurisdiction shallestablish its Appropriations Limit pursuant to Article XllIB at a regularly

scheduled meeting or specialmeeting; and

WHEREAS, the Board of Directors on July 14, 2021, adopted Resolution 21-021 providing notice to the public, as required by Government Code Section 7910, that the Board of Directors

would establish the Appropriations Limit for Fiscal Year 2021-22 at its regularly scheduled

meeting on August 11, 2021; and

WHEREAS, no public comment was received regarding the District's appropriation limit for FiscaIYear 2021-22

Section 1. The Board of Directors hereby establishes the Appropriations Limit for FiscaIYear 2021-22 for the Alameda-Contra Costa Transit District at $584,043,403 as documented In Exhibits A and B attached hereto and incorporated by reference.

Section 2. This resolution shall become effective immediately upon its passage by

PASSED AND ADOPTED this [[.th day of August 202].

Elsa Ortiz. President Attest

Distlj1115 !cretary

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1, Linda A. Nemeroff, District Secretary for the Alameda-Contra Costa Transit District, do hereby certify that the foregoing Resolution was passed and adopted at a regular meeting of the Board of Directors held on the llth day of August 2021, by the following rollcallvote:

AYES DIRECTORS SHAW, WALSH, BECKLES, WILLIAMS, PEEPLES, VICE PRESIDENT

YOUNG. and PRESIDENT ORTIZ

NOES:

ABSENT

NONE NONE NONE ABSTAIN

Z J

Linda A. Nemeroff, District Secretary

.,-"''') J .,-7

# ..>r

JilIA. Sprague,69neralCounsel

/

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About AC Transit

MISSION:

WE DELIVER SAFE, RELIABLE, SUSTAINABLE TRANSIT SERVICE THAT RESPONDS TO THE NEEDS OF OUR CUSTOMERS AND COMMUNITIES.

The Alameda-Contra Costa Transit District (AC Transit) is a special transit district under state law based in Oakland, California. Voters created AC Transit in 1956 and subsequently approved a $16,5000,000 bond issue in 1959, enabling the District to buy out the failing, privately owned Key System Transit Lines. AC Transit’s service began operating in October 1960. The new district built up its bus fleet with 250 new

“transit liner” buses, extended service into new neighborhoods, created an intercity express bus network, and increased Bay Bridge bus operations.

In the 60 years that AC Transit has been in operation, the District has increased its service area, expanded the types of services it offers, and became a leader in the use of hydrogen fuel cell buses.

AC Transit is the third-largest public bus system in California, serving 13 cities and adjacent unincorporated areas in Alameda and Contract Costa counties.

AC Transit has a seven-member elected Board of Directors that sets policy and hires the General Manager and General Counsel. Five of the directors represent specific wards within the service area and two are elected at-large. The General Manager leads the executive teams to implement Board policies.

There are 2,209 approved staff positions at seven facilities, of which 86 percent are within the Operations Department. Most employees are represented by one of the three bargaining units: Amalgamated Transit Union (ATU); American Federation of State, County, and Municipal Employees (AFSCME); and International Brotherhood of Electrical Workers (IBEW).

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Passenger and Service Portrait

Updated September 2021

Service Area

• 364 square miles

• 13 cities plus adjacent unincorporated communities including service to downtown San Francisco via the Bay Bridge and Foster City and San Mateo via the San Mateo Bridge Service Levels

• 132 bus lines (as of September 2021)

• Serving 25 BART stations

• Approximately 5,400 bus stops

• 635 Buses

• 16.7 million revenue service miles driven annually

Passenger Trips

• 21.3 million trips annually (FY 2020-21)

• 63,000 passengers each weekday (FY 2019-20)

Demographics

• 11% under 20 years of age

• 30% between the ages of 20-29

• 11% over 60 years of age

Service Usage Per Passenger

• 42% don’t own automobiles

• 42% of all trips are work related

• 9% of all trips are school related

Fare Structure

Local (Effective July 1, 2019)

Cash Fare Adults

Single Ride $2.50

Day Pass $5.50

Youth (5-18) / Senior / Disabled

Single Ride $1.25

Day Pass $2.75

Clipper Cash Adults

Single Ride $2.25

Day Pass $5.00

Youth (5-18) / Senior / Disabled

Single Ride $1.12

Day Pass $2.50

Local Clipper Passes

Clipper Adult 31-Day Pass $84.60 Clipper Youth 31-Day Pass $34.00 Clipper Senior/Disabled Pass $34.00

Transbay (Effective January 1, 2020) Cash Fare

Adults $6.00

Youth (5-18) / Senior / Disabled $3.00 Transbay Clipper Passes

Adult 31-Day $216.00

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Fixed Route Accessibility All coaches are equipped with:

• Passenger ramps/lifts and kneeling features. Operator protection barriers and PPE dispensers during COVID

• Priority seating for seniors and individuals with a disability

• Two (2) wheelchair securement areas on every bus.

• Stanchions (handrails) throughout the bus and on every seat

• Internal Text Messaging signs and Automatic Voice Announcements (AVA)

• Reduced fares for seniors and individuals with a disability.

• 14-member Accessibility Advisory Committee appointed by the Board of Directors.

Americans with Disabilities Act (ADA) Mandated Paratransit

• Shared-ride Paratransit service is available from the East Bay Paratransit Consortium (BART and AC Transit) for persons who are prevented from using regular bus or train service.

• 16-Member Service Review Advisory Committee represents individuals with a disability, seniors and health and human services organizations

• Website: www.eastbayparatransit.org. Phone number: 510-287-5000

Information for Hearing or Visually Impaired

• Public Information is available in accessible formats including Braille, audio tape, computer diskettes, and large print.

• “711” through the California Relay Service is available for route information and to make service comments.

Website: www.actransit.org Regional Transit Connection

AC Transit connects with the following fixed route services in the Bay Area:

• San Francisco Bay Area Rapid Transit District Rail Service (BART)

• Dumbarton Bridge Bus Service (Dumbarton Express)

• Union City Transit

• San Francisco Municipal Railway (MUNI)

• San Mateo County Transit District (SamTrans)

• Santa Clara Valley Transportation Authority

• SolTrans

• Western Contra Costa Transit Authority (WCCTA) and Martinez Link

• Capital Corridor/Amtrak

• Altamont Commuter Express (ACE)

• Golden Gate Transit

• Caltrain

• Fairfield and Suisun Transit (FAST)

• Emery Go Round

• San Leandro LINKS

• San Francisco Bay Ferry (from Alameda, Oakland & Richmond to San Francisco/South San Francisco)

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Locations

AC Transit has eight facilities, seven of which are operating facilities and one (*) of which offer customer services to the public, including Clipper and pass sales and trip-planning assistance.

General Office/Customer Service 1600 Franklin Street

Oakland, California

Training and Education Center 20234 Mack Street

Hayward, California

Emeryville Operating Division (#2) 1177 47^th Street

Emeryville, California Richmond Division (#3) 2016 MacDonald Avenue Richmond, CA 94801-3356

East Oakland Operating Division (#4) 1100 Seminary Avenue

Oakland, California

Central Maintenance Facility and Stores Facility (#5) 10626 East 14th Street

Oakland, California

Hayward Operating Division (#6) 1758 Sabre Street

Hayward, California Salesforce Transit Center Transbay Terminal First and Missions Streets San Francisco, CA 94105

Important Telephone Numbers / Contact Information Customer Relations

Ticket Office District Secretary Main

Media Relations

Telephone Device for the Deaf (TDD) Transit Information

Website

Customer Feedback:

(510) 891-4700 (510) 891-4706 (510) 891-7284 (510) 891-4777 (510) 891-4745

Dial “711” (through the California Relay Service) Dial “511”

www.actransit.org

www.actransit.org/feedback

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Financial Structure, Policy and Process

Budget Development Process

The District recognizes the importance and urgency of improving the budget development process to better serve the needs of the Agency today and in the foreseeable future. To that extent, the District’s staff implemented an approach that emphasizes goals and objective on-the-basis of sustainable long-term strategy and is therefore strategically and financially sound.

Overview of the FY 2021-22 Budget Development Process

• The CFO, in coordination with the General Manager, led the process change by designing and implementing conceptual framework developed by Budget Staff. Executive Staff validated new approach and adopted it for roll-out on a progressive schedule.

• Existing systems platform was configured to allow departmental managers to plan their allocations.

• Development and discussion of the assumptions for the microeconomic and macroeconomic environment, determining revenue and expenditure line items to be used in the development of the operating budget.

• Development, presentation, and discussion of the Mid-Year Budget, including 10-Year projections based on the SRTP. Determination of the districtwide goals and objectives.

• Coordination and close communication with department managers to build their operating budget under a performance-based budget approach.

• Validation of allocations in conjunction with the General Manager and the Executive Staff by review of departmental and line-item budgets, assurance of the funding of the key strategic initiatives and determination of priorities for adjustments, changes, or modifications of programs.

• Definition of the priorities for inclusion in the District Funded Capital Program, prioritizing projects of high impact primarily related to health, safety, maintenance, and technology considering those that have been postponed in previous years.

• In the event the Board of the Directors do not adopt the District Budget by June 30th, the Board of Directors may adopt a continuing appropriations resolution until such time as the District Budget is adopted. A continuing appropriations resolution allows payment for services performed on behalf of the District to continue until such time as a district Budget is adopted.

• All unexpended and unencumbered appropriations lapse at the end of the fiscal year.

Budget Calendar

Board Policy 311 (Budget Policy) requires that the Board of Directors approve a budget calendar no later than November 30^th of each year which will include tentative dates for Board Workshop(s), public review, and Board approval of the budget. The Budget Policy provides for the Board of Directors to adopt a resolution by June 30^th of each fiscal year approving a balanced District Budget for the following fiscal year, including the revision and approval of the corresponding Fiscal Year Goals, Objectives, and Performance Metric Targets.

The economic disruption caused by the COVID-19 pandemic and timing of a recovery is constantly changing and shaping how AC Transit responds. Additional financial analysis will be made available that takes into consideration evolving service level plans as well as changes in the level of revenue sources.

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The proposed budget calendar is as follows:

Date Description

November 12, 2020 Approval of the budget development process and calendar, pending review and discussion.

April 14, 2021 Presentation of Draft FY 2021-22 Operating Budget, including an overview of the major assumptions and drivers to the Operating Revenues, Subsidies and Operating Expenses.

May 26, 2021 Presentation of the Proposed Operating and Capital FY 2021-22 Budget including review of any adjustments to the Draft budgets.

June 9, 2021 Presentation of the FY 2021-22 Recommended Budget including any adjustments to the proposed budget. Staff presents resolution for the Board to adopt the FY 2021-22 Operating and Capital Budgets,

July 1, 2021 The Adopted FY 2021-22 Budget becomes effective.

The advantage of the Board adopting a budget development calendar is that it helps all District staff understand the timeline and requirements for adopting a balanced budget for the coming fiscal year. There are no significant disadvantages.

Budgetary Control

The District Budget includes all operating, capital and interest expense requirements of the District for a fiscal year. The District Budget also includes District’s contribution to the AC Transit Retirement Plan as determined by the Board following review of an actuarial study prepared no less often than every two years.

In addition, the District budget includes an analysis of the underlying assumptions for revenue and expense projections; the number of authorized positions by department; and, the revenue service hours and miles on which the District Budget is based. Any change in revenue services hours or miles during the fiscal year requires prior approval by the General Manager.

The Board of Directors approves an amended appropriations resolution when necessary to authorize the receipt and expenditure of funds unanticipated in the District Budget and reallocation of funds necessary for the efficient operation of the District. Budgetary control is maintained at the department level for each operating department and at the project level for each capital project. Any expenditure more than the approved Capital Budget requires prior approval by the Board of Directors.

Revenue and expense results for the fiscal year are presented for Board review no less often than bi- monthly. If there are significant variations between the results and the District budget, recommendations are made to the Board for alternative strategies to achieve a balanced budget by fiscal year end, which are formalized during the Mid-Year budget review process.

The General Manager is authorized to exceed budgetary control limitations for expenditures when an unforeseen combination of circumstances calls for immediate action with inadequate time for prior Board approval. The action must be made to avert or alleviate damage to property, to protect the health, safety and welfare of the community, or to repair or restore damaged or destroyed property of the District in order to ensure that the facilities of the District are available to serve the transportation needs of the general public.

Within 30 days of the emergency, the General Manager must submit to the Board of Directors for confirmation, a report explaining the necessity of the action, a listing of expenditures made under these

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Basis of Presentation of Funds and Fund Structure

The District presents its general-purpose financial information in two funds: the enterprise fund and the pension trust fund. Separate financial statements are presented for each fund category. However, only the enterprise fund is presented in the budget reports.

Enterprise funds are used to account for operations that are financed and operated in a manner similar to private businesses. An enterprise fund includes a set of self-balancing accounts that comprises the District’s assets, liabilities, net assets, revenues, and expenses. Only revenues and expenses are budgeted for each fiscal year.

Enterprise funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with an enterprise fund’s principal ongoing operations. The principal operating revenues of the District’s enterprise fund are passenger fares. Operating expenses include the cost of services, administrative expenses, and depreciation on capital assets and equipment. All revenues and expenses not meeting these definitions are reported as non-operating revenues and expenses.

The District’s general-purpose (non-budgetary) financial statements include all financial activities controlled by or dependent upon actions taken by the District’s Board of Directors. This includes: the financial activities of the District’s Special Transit Service Districts No. 1 and No. 2 and other areas which the District has contracted to provide transit service; the financial activities of the AC Transit Financing Corporation, a nonprofit public benefit corporation formed to provide financial assistance to the District; and the financial activities of the District’s pension plan and the deferred compensation plan.

Resources associated with these financial activities are allocated to funds based upon their purpose and how the spending is controlled.

Basis of Budgeting

The District’s fiscal policies establish the framework for the management and control of the District’s resources to ensure that the District remains fiscally sound. The District’s policies are approved by the Board of Directors and determine where and how District resources should be dedicated. For this reason, District goals, objectives, short and long-range planning and performance analyses are incorporated into the budget development process.

It is the policy of the District that the Board of Directors approve a balanced an annual budget prior to the beginning of each fiscal year. The budget is developed using a modified accrual basis of accounting.

However, there are certain difference between the Generally Accept Accounting Principles (GAAP) based financial statement and the report under the budgetary basis as follows:

• Perspective differences resulting from the AC Transit Financial Corporation not budgeted.

• Encumbrances for supplies and services ordered but not received are reported in the year the order is placed for budgetary purposes, but in the year the supplies are received for financial reporting purposes.

• Transfers from Equity / Net Assets are outflows of budgetary resources but are not expenses for financial reporting purposes.

• Capital outlay funded by District operations are reported as outflows of budgetary resources but are not expenses for financial reporting purposes.

• Depreciation on fixed assets funded by District operations is not budgeted, as it is not an outflow of budgetary resources.

See Appendix for Financial Policies

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Macroeconomic Assumptions

District Status

The general macroeconomic outlook for California and the San Francisco Bay Area has been a mix of uncertainty and hope, with the latest promising news riding on a trend of fewer virus cases. As of this writing, just over 50% of District staff have self-reported as being vaccinated and there is a return-to-office plan entailing hybrid work schedules (partial week of remote working). As seen for several government employers experiencing low levels of staff vaccinations, incentives and mandates are being considered and explored to reduce risk of spreading the virus and its variants.

The financial impact of the COVID-19 pandemic on the District has been greatly reduced by federal stimulus funding – $114.2 million from the Coronavirus Aid, Relief, and Economic Security (CARES) Act, $55.5 million from the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act, and $116.3 million from the American Rescue Plan (ARP) Act based on the latest regional allocation determinations.

The District’s FY 2021-22 budget was amended on September 8, 2021 to include $19.7 million in additional ARP funds.

The significant amount of federal operating support and higher than projected revenues from sales and property taxes have allowed the District to partially restore service that was suspended during the pandemic. Although there is still significant uncertainty about the long-term economic impacts of the pandemic, the District is doing what it can so transit benefits can help the community in economic rebound efforts.

While the demand for service dropped suddenly due to the necessity for shelter-in-place requirements, the District was able to reduce service through natural attrition of bus operator workforce rather than layoffs.

The hiatus in hiring created a “dry” period, where service was reduced to 75% of prior levels from March 2020. Fortunately, emergency federal support allowed the District to continue operating with greatly reduced Farebox revenues.

The District is currently struggling with the ability to hire enough bus operators as service demand returns.

There are several challenges to building back a sufficient workforce of bus operators. A primary concern is to abide by public health advisories from the Division of Occupational Safety and Health (DOSH), also known as Cal/OSHA, and the Centers for Disease Control (CDC), which create capacity constraints in the facilities used to train and hire new bus operators. Attrition is an ongoing issue because of the growing number of retirement-eligible bus operators. Absenteeism is also an issue exacerbated by operators on leave due to COVID-related concerns for health and home-based childcare. Another challenge is the competition the District faces with many other transit operators trying to hire back new bus operators, countered with tolerance of any new required vaccination policies.

The District must also consider how FY 2021-22 expenses and service levels will impact future years and available revenues once federal operating support is discontinued. While it is likely that subsidies will reach prior levels again in the next couple years, operations revenues are less likely to do so. Reduced service levels means ridership is expected to remain relatively low, causing corresponding low levels of farebox revenue. Furthermore, oil and natural gas prices are approaching a seven-year high, which stress the importance of coordinating the priorities on the planning and costing of restored service. Even when reliable revenue streams return, it is also important to remember that the District lost a couple years of revenue growth during the pandemic while contractual and inflationary factors that drive expense growth did not stop.

With the above macroeconomic assumptions in mind, staff is consciously designing the restored service to be more reliable and less taxing on operators than in the past by relying less on built-in overtime, including sufficient extra board (“on-call”) bus operators, and providing adequate rest and meal breaks. The new Tempo Bus Rapid Transit (BRT) service, which opened a few months after the pandemic began, is an example of how the District is setting higher standards of service.

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Keeping the goals for better service and associated cost issues described above in mind, staff expects the hourly base service rate to increase. Collective bargaining agreements implemented recently will also cause service costs to increase. Therefore, the equivalent level of service from before the pandemic will cost more to operate today but will have better on-time performance and reliability.

Overall Economy

Economic growth in 2021 is on the upswing from 2020, nationally as well as locally, and long-term prospects are generally favorable for the Bay Area. More than a year of pandemic conditions have created pent up consumer spending, which is hoped to bolster the job market.

However, the pre-pandemic job market is not the same as today’s job market. Many employers looking for high-skilled workers, including the District, are having to adjust to a labor force that is increasingly selective.

New hires can demand increased wages and seek remote-work options, hindering the rate of return-to- office work settings. Low-wage workers were hardest hit during the pandemic, with some jobs not returning due to technology replacements (e.g. shift to automation and online retail) during the pandemic.

An indicator of successful economic recovery would be the growing in-person patronage of leisure and hospitality industries such as hotels, restaurants, and concert venues. It is hoped that the gradual easing of pandemic-related restrictions paired with “cautious optimism” and increased rates of vaccinations, will eventually help these industries thrive again in the Bay Area.

Still, so much is unknown and economic recovery and expansion is dependent on public response and public health actions regarding new variants of the coronavirus.

While the U.S. market has been more resilient than expected and there is renewed hope as unemployment insurance claims continue to decline, the economy is potentially volatile and vulnerable to economic changes. There are real concerns about inflationary pressures, however the federal government has been avoiding raising interest rates and is working to normalize the economy.

Population Growth and Pandemic

Overall, population changes in the Bay Area and nation are still in flux. Based on 2020 census data, the nation’s population is growing at the slowest rate since the 1930s. Before the pandemic began, the rate of population growth in the East Bay and California overall was already slowing. The fastest growing age group is older people, aged 65+, and this will increase the need for support services, including paratransit services provided by the District.

The counties of Alameda and Contra Costa are relatively higher growth areas in the last decade, with 11 percent increases. As in the last recent years, the rate of overall growth is slowing in the Bay Area. The long-term population trend is for these two counties is shown in the “snapshot” of U.S. Census Data below.

“Snapshot” U.S. Census Data

County 2000 2010 2020

Alameda County 1,443,741 1,510,271 1,682,353

change 4.6% 11.4%

Contra Costa County 953,120 1,049,025 1,165,927

change 10.1% 11.1%

Source: United States Census

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Source: United States Census

In the first two months of the pandemic, more than 20 million people lost their jobs. COVID-related deaths and new cases grew and eventually peaked for the nation in the beginning of 2021. At the time of the publication of this budget book, mask mandates remain in effect for most Bay Area counties and the number of new virus cases is on the downward trend. The graph below, from the 2021 Wells Fargo U.S. Economic Outlook, shows the range of COVID-19 impacts from the past year.

While no one reason explains population growth changes, the region’s high cost of living and lack of affordable housing has been a major deterrent for moving to and settling in the Bay Area. When the pandemic forced a shift to work from home for many job sectors, commute constraints lifted, and many sought to live in more remote areas with more spacious real estate. This is apparent in the household

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County saw housing prices increase by as much as 25% from January 2020 to January 2021. Part of why Bay Area home prices continue to be so high is the lack of housing supply. However, skyrocketing home prices have occurred elsewhere in the nation, as shown by the graph of single-family home sales taken from the October 2021 Wells Fargo U.S. Economic Outlook (see “snapshot” of Property Trends below).

It is too soon to predict the impact of Bay Area population changes on ridership demand for the District.

The myriad of unknowns regarding public health, job recovery, commute behavior, education, entertainment, housing supply, and other considerations, will make planning for the near-term challenging.

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Budget Summary

Resolution 21-020 was adopted on June 9, 2021 by the Alameda-Contra Costa Transit District Board of Directors approving $479.7 million and $7.2 million in the General Fund Operating and Capital Budgets, respectively.

Resolution 21-035 was adopted on September 8, 2021 by the Alameda-Contra Costa Transit District Board of Directors approving $499.0 million in the General Fund Operating Budget. (No change to Capital Budget).

In this budget book, “FY 2021-22 Adopted Budget” refers to the amended operating budget, as approved in resolution 21-035.

The Adopted Operating Budget is balanced at $499.0 million in operating revenues/subsidies and expenses. This is $32M or 7% higher than the pre-pandemic budget from FY 2019-20, but also only includes 85% of pre-pandemic service.

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Operating Revenues

Operating: Passenger Fares

Fare revenue is gradually increasing as service levels are being restored after falling from an average 4.57 million riders per month before the pandemic, to less than 2 million riders per month during FY 2020-21.

Normally closer to 13% of the revenue budget, passenger fares are projected to make up 4.7% of the total revenue budget.

On May 12, 2021, the Board voted to defer the implementation of the July 1, 2021 local fare increase by one-year to July 1, 2022. The estimated annual fare revenue loss resulting from this local fare increase deferral is approximately $2.3 million.

The Board voted to implement “Fare Free Fridays” in the month of September, which resulted in an estimated fare revenue loss of approximately $400,000.

Additionally, the January 1, 2022 Transbay fare increase was deferred by 6-months. The estimated revenue impact of this Transbay fare increase deferral is approximately $77,000.

Operating: Contract Services

The Adopted Operating budget includes the continuation of revenue associated with fare media agreements with UC Berkeley and Peralta Colleges, and the service agreement with the City of Oakland for the Broadway Shuttle. This budget also includes expected bus bridge service for BART to support unexpected outages and continued BART Early Bird service. Contract Services are expected to decrease by $4.5 million due to change in operating agreement with BART.

Operating: BART Transfer

The Adopted Operating budget includes revenues from an extension of the existing BART Feeder Service Agreement, which is currently under review, and are expected to increase by $0.5 million compared to the prior fiscal year.

Operating: Investment Income

Investment income revenue budget is projected to decrease by about $0.5 million from the FY 2020-21 budget, as rates have stayed low.

Operating: Advertising

Advertising revenues are projected to decrease slightly by less than $0.1 million (6%) from the prior fiscal year.

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Operating: Other Revenue

This category includes a variety of other small categories of operating revenues such as parking citations and miscellaneous reimbursements. Parking citation revenue is will likely increase due to citations of parked vehicles in the Bus Only lanes for Tempo BRT. FY2021-22 Other Revenue Budget is set lower than FY2020-21 budget by $0.9 million based on updated revenue expectations.

Operating: Real Estate

Rental revenues are projected to increase by $0.5 million (39%) from the prior fiscal year budget.

Sales Tax-based Subsidies: Transportation Development Act (TDA)

The TDA subsidy has long been a cornerstone of transit funding and is the largest source of subsidy revenue for the District. State law allows each county to charge a ¼ cent sales tax to finance various transit services. The Adopted Operating budget reflects a $17 million (30%) increase from prior year budget and is based upon recent fund estimate information released by the Metropolitan Transportation Commission (MTC).

Sales Tax-based Subsidies: AB1107

The AB1107 subsidy is a ½ cent sales tax with a portion that is shared between the District, BART and the San Francisco Municipal Transit Agency. The projected revenues for FY 2021-22 reflect an increase of

$9.4 million (29%) from prior fiscal year budget and are based on the MTC fund estimate.

Sales Tax-based Subsidies: Measure B

In 2000, nearly 82% of Alameda County voters approved Measure B which is a ½ cent transportation sales tax. Alameda CTC administers Measure B funds to deliver essential transportation services and improvements. The projected revenues for FY 2021-22 reflect an increase of $1.2 million (5%) from the prior fiscal year budget.

Sales Tax-based Subsidies: Measure BB

In November 2014, the voters of Alameda County approved an additional ½ cent transportation sales tax in addition to Measure B to fund a comprehensive 30-year transportation plan. The projected revenues for FY 2021-22 reflect an increase of $18.6 million (76%) from the prior fiscal year budget.

Sales Tax-based Subsidies: Measure J

Measure J is a ½ cent transportation sales tax to support essential transportation services and improvements for Contra Costa County. The projected revenues for FY 2020-21 reflect an increase of $1.5 million (40%) from the prior fiscal year budget.

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Property Taxes

The District receives a fixed portion of property taxes collected within its service area. Property taxes are based on assessed valuations and any effects from a recession are delayed as reduced sale prices work their way through the real estate market. This revenue and its different timing than sales taxes help the District fare better during a recession. The estimate for FY 2021-22 is $5.7 million (5%) more than FY 2020- 21 budget.

Parcel Taxes: Measure VV

The Measure VV/C1 Parcel Tax subsidy is the continuation of a $96.00 per parcel in the area designated as Special District #1 that was passed in November 2016. As a flat tax based on the number of parcels, it is one of the least volatile of the District’s revenue streams.

State Transportation Assistance (STA)

STA funding is generated from the sales tax on diesel fuel, and the amount of money can fluctuate based on the direction of fuel prices. Funds are distributed by the MTC based on population and transit agencies’

revenues. The projected revenues for FY 2021-22 reflect an increase of $0.8 million (4%) from prior fiscal year budget and are based on the MTC fund estimate.

Regional Measure 2

The District receives funding from Regional Measure 2 for Rapid Bus, Owl (late-night), and Regional Express Bus service. The District also receives funding to run the Dumbarton Express service on behalf of the Dumbarton Regional Operations Consortium. Funding amounts are normally fixed for the non- Dumbarton revenues, and the Dumbarton revenue is based on the cost of service operated. The District will receive a slight increase in FY2021-22 versus FY 2020-21 of $0.1 million (1%)

ADA Federal

Projected revenues from Federal ADA assistance reflect a decrease of $8.1 million (60%) due to timing of FTA grant awards and receipt of funds.

Other Federal, State & Local

R

evenues in these categories are less regular and predictable than others. Federal funds include COVID- 19 aid and stimulus assistance (Coronavirus Response and Relief Appropriations Act (CRRSA) and American Rescue Plan (ARP)).

Other federal funds for operating assistance are determined through the MTC Lifeline program. State funds include Cap & Trade Low Carbon Transit Operations Program and operating funds for Tempo BRT service.

Local funds include funding for the Transit Information Display program and the Regional Transit Card program.

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Coronavirus Response and Relief Appropriations Act (CRRSA)

The FTA Coronavirus Response and Relief Appropriations Act (CRRSA) the District is receiving makes up

$55.5 million of the “Other Federal” subsidies for FY2021-22.

American Rescue Plan (ARP)

The FTA ARP Budget for FY2021-22 of $19.7 million is included in the “Other Federal” subsidies for FY2021-22.

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AC TRANSIT

FY 2021-22 ADOPTED OPERATING REVENUE AND SUBSIDIES BUDGET ($ IN THOUSANDS)

FY 2019-20 FY 2020-21 FY 2021-22

ACTUALS ADOPTED BUDGET ADOPTED BUDGET

REVENUE & SUBSIDIES Line Operating

1 Passenger Fares 44,490 21,918 27,156

2 Contract Services 8,637 9,786 5,300

3 BART Transfers 5,532 4,824 5,318

4 Advertising 1,349 1,147 1,080

5 Other Revenue 830 1,364 519

6 Real Estate 1,146 1,385 1,928

7 Interest Income 933 630 143

8 Total Operating Revenues 62,917 41,053 41,443

Unrestricted Subsidies

9 State - TDA 76,626 57,056 73,970

10 State - AB1107, Sales Tax 44,486 32,057 41,500

11 Local Sales Taxes - Measure B 31,002 22,573 23,745

12 Local Sales Taxes - Measure BB 34,304 24,590 43,181

13 Local Sales Taxes - Measure J 4,784 3,611 5,072

14 Property Taxes 119,487 118,568 124,258

15 Parcel Taxes - Measure VV 29,615 28,678 28,907

16 State - STA 30,266 23,080 23,890

17 State - AB2972, OUSD - 1,000 1,843

18 RM2 and DB Service 11,820 9,001 9,134

19 ADA Federal - 13,462 5,385

20 ADA State and Local 2,276 5,121 944

21 Other Federal 33,000 85,184 75,222

22 Other Local 1,648 1,328 500

23 Total Unrestricted Subsidies 419,313 425,311 457,552

24 TOTAL UNRESTRICTED 482,230 466,364 498,995

25 Restricted Preventative Maintenance - 11,451 -

26 TOTAL ALL REVENUE & SUBSIDIES 482,230 477,814 498,995

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*Total may not add up to 100% due to rounding.

Property Taxes 25.4%

TDA 12.2%

Passenger Fares 4.7%

AB 1107 Measure BB 6.9%

5.3%

Measure B 4.8%

Measure VV 6.1%

STA 4.9%

Other Operating 4.1%

RM2 & DB Local 1.9%

ADA Subsidies 4.0%

Measure J 0.8%

Other Subsidies 0.7%

FTA CARES Act 18.1%

FY 2020-21 Revenue Budget

Property Taxes 24.9%

TDA 14.8%

Passenger Fares 5.4%

AB 1107 8.3%

Measure BB Measure B 8.7%

4.8%

Measure VV 5.8%

STA 4.8%

Other Operating 2.9%

RM2 & DB Local 1.8%

ADA Subsidies 1.3%

Measure J 1.0%

Other Subsidies 0.5%

CRRSA 11.1%

ARP 3.9%

FY 2021-22 Revenue Budget

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Operating Expenses

AC Transit’s Operating Expenses consist of eight categories: Labor, Services, Fuel and Lubricants, Office/Printing Supplies, Materials and Supplies, Purchased Transportation, Utilities and Taxes, Casualty and Liabilities, Interest, and Other.

$0

$100

$200

$300

$400

$500

$600

FY 2020-21 Adopted Budget FY 2021-22 Adopted Budget

Millions

Other

Interest

Casualty &

Liabilities Utilities and Taxes Purchased Transportation Materials &

Supplies Office/Printing Supplies Fuel and Lubricants Services

Labor

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AC TRANSIT

FY 2021-22 ADOPTED OPERATING BUDGET ($ IN THOUSANDS)

FY 2019-20 FY 2020-21 FY 2021-22

ACTUALS ADOPTED MID-YEAR

BUDGET ADOPTED

BUDGET Line REVENUES & SUBSIDIES

1 Operating 62,917 37,231 41,443

2 Unrestricted Subsidies 419,981 426,592 457,552

3 TOTAL REVENUES & SUBSIDIES 482,898 463,822 498,995

OPERATING EXPENSES Labor

4 Operator Wages 89,804 79,279 88,647

5 Other Wages 75,035 74,785 79,190

6 Fringe Benefits 124,353 122,533 133,654

7 Pension Expense 59,423 60,744 62,351

8 TOTAL LABOR COSTS 348,615 337,340 363,842

Non-Labor

9 Services 26,348 32,954 37,126

10 Fuel and Lubricants 11,897 10,857 12,766

11 Office/Printing Supplies 1,001 1,208 1,202

12 Materials & Supplies 17,288 17,300 18,061

13 Purchased Transportation 31,249 23,207 28,100

14 Utilities and Taxes 6,773 6,885 6,281

15 Casualty and Liabilities 8,027 20,462 21,707

16 Interest Expense 683 402 532

17 Other Operating Expenses 5,099 8,682 9,379

18 TOTAL NON-LABOR 108,365 121,957 135,153

19 TOTAL OPERATING EXPENSES 456,980 459,297 498,995

20 NET OPERATING SURPLUS/(DEFICIT) 25,918 4,525 (0)

21 RESTRICTED PM - 11,451 -

22 OPEB FUND CONTRIBUTION 1,000 2,000

23 DISTRICT CAPITAL CONTRIBUTION 9,766 8,198 7,209

24 NET OF NON-OPERATING ITEMS 15,152 5,778 (7,209)

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Labor

Labor costs are the largest portion of the operating budget. In FY 2020-21, a strategy to preserve jobs during the pandemic but save in labor costs was to cease filling all vacant positions. The District reduced service by 30% and did not require as many operators. The District also postponed the replacement of certain non-operator positions.

Federal aid from the Coronavirus Response and Relief Appropriations Act (CRRSA) and American Rescue Plan (ARP) Act allows the District to train and hire new bus operators and gear up to achieve 90% of pre- pandemic service levels in FY 2022-23. The District is also seeking to fill essential non-operator vacancies previously “frozen” to save on labor costs. Overall, the Adopted Budget full-time equivalent positions for FY 2021-22 is for 2,219 positions, which reflects ten new positions. Of the ten new positions, two are in response to train more bus operators to help increase service levels.

Efforts to restore service levels from a reduced level of spending during the pandemic entail increased labor costs of $26.5 million (8%) for FY 2021-22. Additional increases result from the renewal of the ATU and IBEW collective bargaining agreements (CBA). The CBA for AFSCME is slated for this fiscal year (after the publication of this budget book). The increase in Fringe Benefits is due to increases in wages and health insurance costs.

Board of Directors

District Secretary

External

Affairs Finance General

Manager HR IT Legal Operatio

ns

Overhea

d Planning Retireme nt FY19-20 Actual $198 $606 $6,471 $14,598 $3,526 $6,314 $7,876 $4,386 $284,785 $10,049 $8,924 $883 FY20-21 Adopted Budget $207 $571 $7,468 $16,184 $4,248 $5,887 $8,919 $4,585 $274,385 $4,898 $10,534 $855 FY21-22 Adopted Budget $172 $603 $7,595 $16,262 $4,396 $7,163 $9,680 $4,550 $292,917 $10,512 $10,447 $944

-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

($ in Thousands)

Labor

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Pension

Pension costs are planned to increase by $1.6 million (3%) for FY 2021-22 based on pension actuarial estimates from increased payroll costs.

Services

The Adopted Services expense budget increased by $4.2 million (13%) due to deferred FY 2020-21 expenses as well as an increased need for software and security to support remote working.

Fuels and Lubricants

Overall fuel costs are expected to be higher than FY 2020-21 due to recent price increases coupled with increased service levels due to easing of shelter-in-place and gradual re-openings. The Adopted Budget reflects an increase in Fuel and Lubricant expenses by $1.9 million (18%).

Board of Directors

District Secretary

External

Affairs Finance General

Manager HR IT Legal Operatio

ns

Overhea

d Planning Retireme nt

FY19-20 Actual $7 $1,324 $3,068 $665 $783 $3,752 $2,356 $14,408 $538 $654

FY20-21 Adopted Budget $11 $11 $1,778 $3,870 $862 $2,647 $6,354 $3,033 $16,384 ($640) $1,633 $1 FY21-22 Adopted Budget $11 $33 $2,486 $4,578 $832 $3,485 $7,929 $2,715 $17,303 $185 $1,888 $1

($2,000) -

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

Services

Operations

FY19-20 Actual $11,899

FY20-21 Adopted Budget $10,857

FY21-22 Adopted Budget $12,766

$9,500

$10,000

$10,500

$11,000

$11,500

$12,000

$12,500

$13,000

ADOPTED BUDGET FY

ADOPTED BUDGET

FY 2021-2022

TABLE OF CONTENTS

RESOLUTION NO. 21-020

FISCAL YEAR 2021-22

WHEREAS, the Board of Directors reviewed and established the Budget Calendar and

WHEREAS, the Board of Directors has received and reviewed the General Manager's

held May 26, 2021.

a. Total Operating Revenues:

b. Total Operating Expenses:

c. Transfer to/(from) Unrestricted Net Assets:

f. Transfer to/(from) General Fund g. TotalCapitalProgram Contribution

Section2. Approves a 3.0 percent increase to base salary for all unrepresented

2021 and a 3.0 percent increase to base salary for IBEW employee members as of January 1,

Section 5. Directs the General Manager to return to the Board at a later date to

negotiated or approved.

Section 6. This resolution shall become effective immediately upon its passage by

PASSED AND ADOPTED this 9th day of June 2021

Elsa Ortiz, Presiden Attest

:, Di\tri

RESOLUTION NO. 21-035

FISCAL YEAR 2021-22

FY 2021-22 budget, and approved Budget Goals for the Development of the General Fund

Apri[ 2021, and May 202].;.and

WHEREAS, the Board of Directors has received and reviewed the General Manager's

WHEREAS, the Board of Directors has received and adopted the General Manager's

for FiscaIYear 2021-22 in the amount of$499.0 Million with the expenses and transfers identified

Total Operating Revenues

Total Operating Expenses

Transfer to/Ifrom) Unrestricted Net Assets:

Section 2. This resolution shall become effective immediately upon its passage by

Elsa Ortiz, President Attest

Ne?\\groff; District

1, Linda A. Nemeroff, District Secretary for the Alameda-Contra Costa Transit District, do

Board of Directors held on the 8th day of September 2021, by the following rollcallvote:

SHAW and VICE PRESIDENT YOUNG

JilIA. Sprague,66neralCounsel

/

RESOLUTION NO. 21-028

WHEREAS, Government Code Section 79].0 provides that each year the governing body

scheduled meeting or specialmeeting; and

would establish the Appropriations Limit for Fiscal Year 2021-22 at its regularly scheduled

WHEREAS, no public comment was received regarding the District's appropriation limit for FiscaIYear 2021-22

Section 2. This resolution shall become effective immediately upon its passage by

Elsa Ortiz. President Attest

YOUNG. and PRESIDENT ORTIZ

JilIA. Sprague,69neralCounsel

/

About AC Transit

Passenger and Service Portrait

Financial Structure, Policy and Process

Budget Development Process

Overview of the FY 2021-22 Budget Development Process

Budget Calendar

Budgetary Control

Basis of Presentation of Funds and Fund Structure

Basis of Budgeting

Macroeconomic Assumptions

District Status

Overall Economy

Population Growth and Pandemic

Budget Summary

Operating Revenues

Operating: Passenger Fares

Operating: Contract Services

Operating: BART Transfer

Operating: Investment Income

Operating: Advertising

Operating: Other Revenue

Operating: Real Estate

Sales Tax-based Subsidies: Transportation Development Act (TDA)

Sales Tax-based Subsidies: AB1107

Sales Tax-based Subsidies: Measure B

Sales Tax-based Subsidies: Measure BB

Sales Tax-based Subsidies: Measure J

Property Taxes

Parcel Taxes: Measure VV

State Transportation Assistance (STA)

Regional Measure 2